Governance mechanism and risk management of Congolese commercial banks

Louison TETE Sula, Yannick NSIESILA Manzanza and Alain PAYANZO Ntsomo

Journal of Academic Finance, 2025, vol. 16, issue 1, 2 - 20

Abstract: Purpose : This study evaluates the impact of accounting governance and quality management on the risks of commercial banks in the Democratic Republic of Congo. Methodology : the methodology applied in this study is based on the DEA (Data Envelopment Analysis) method and the CAMELS stochastic modeling method, used to identify banks whose financial health is deteriorating, i.e. banks presenting the risk of insolvency. The results of the DEA application on the efficiency of banks thus measuring management quality then the results of the CAMELS method in terms of accounting governance leading to the procedure for identifying banks exposed to insolvency risks. Results : Our analysis allows for an overall classification of banks at risk of insolvency and solvent banks in the Democratic Republic of Congo (DRC). The list of banks that went bankrupt at least once during the study period: ADVANS (10 times: 0.93), CITY GROUP (5 times: 0.91), BIAC (5 times: 0.91) , 0.84), BCDC (5 times: 0.90)), Standard Bank (4 times: 0.92), TMB (2 times: 0.97), BOA (1 time: 0.97), PROCREDIT ( 1 time: 0.99). Whichever specification you choose, the results are quite mixed. Overall, the results obtained are consistent but not as good as those of European, American and Asian banks. Originality of the paper : In this study, we present two indicators that measure risk: the expected indicator of bank insolvency and credit risk. The insolvency indicator is evaluated quantitatively using the CAMELS method, which combines six criteria carried out on a panel of 12 banking institutions between 2010 and 2020.

Keywords: Banking governance; risk management; DEA method; CAMELS method; Gouvernance bancaire; gestion des risques; méthode DEA; méthode CAMELS (search for similar items in EconPapers)
JEL-codes: G3 M1 N8 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:jaf:journl:v:16:y:2025:i:1:n:717

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